Question: Assess the likelihood that the following firms will be taken over, based upon your understanding of the free cash flow hypothesis.
a. A firm with high growth prospects, good projects, low leverage, and high earnings.
b. A firm with low growth prospects, poor projects, low leverage, and poor earnings.
c. A firm with high growth prospects, good projects, high leverage, and low earnings.
d. A firm with low growth prospects, poor projects, high leverage, and good earnings.
e. A firm with low growth prospects, poor projects, low leverage, and good earnings. You can assume that earnings and free cash flows are highly correlated.